Confirmation and Amending the Chapter 13 Repayment Plan
A Chapter 13 bankruptcy cannot proceed until your repayment plan is confirmed by the bankruptcy judge, which is done at a confirmation hearing which you must attend. The main concern of the judge will be whether you can make the payments under the plan you submitted. The judge will also ask, at your confirmation hearing, whether there are any objections by the trustee or creditors. The trustee may object to the plan if she does not think it is feasible — in other words, if it doesn't seem likely that you'll be able to make the payments. However, a modified plan can be submitted if the court agrees.
When the judge confirms your plan, the automatic stay ends, but your confirmed plan becomes binding upon all of your creditors, including any who objected to your plan. However, you will have to file Form 230B, Order Confirming Chapter 13 Plan, or an equivalent local form if your court provides it, with the bankruptcy court clerk and send a notice of the confirmed plan to all of your creditors.
Modifying the Repayment Plan
Section 1323(a) of the Bankruptcy Code gives the debtor an absolute right to amend the plan before the confirmation hearing, but any modification must still conform to the requirements for confirmation. There are several reasons why you may want or need to modify your repayment plan:
- to correct errors, such as overlooked creditors or debts;
- to reflect material changes, especially changes in income, such as getting or losing a job;
- to reflect new terms that you negotiated with a creditor;
- to change a previous decision, such as deciding to keep or surrender the collateral for a secured debt;
- to borrow money during your bankruptcy, perhaps to buy a new car or to cover an unexpected medical or business expense — you will have to plan to pay 100% of such postpetition debts;
- to respond to valid objections to your plan;
- to remove debts that you have successfully objected to;
- to modify your repayment plan to get it confirmed by the bankruptcy judge.
When you propose changes to your repayment plan, you must send a notice to each of your affected creditors. The notice must be sent to the creditor's address listed with the bankruptcy court and must contain the following:
- your name and last 4 digits of your security number;
- the names of any creditors affected by the modification and your account number with the creditor;
- your proposed modification.
Amending Your Repayment Plan after the Confirmation Hearing
If the judge does not confirm your plan, then she allow you to modify your plan so that it can be confirmed, unless the court finds that you acted in bad faith or that it does not seem feasible that you would be able to carry out a confirmable chapter 13 plan. If you acted in bad faith, then the court will seek to dismiss your case. If it does not seem feasible that you can successfully execute a chapter 13 payment plan, then your case will probably be converted to chapter 7, where no repayment is necessary.
Amending a Confirmed Plan
It may become necessary to amend a confirmed plan, if, for instance, you receive money or property after the confirmation, or the judge ruled on a motion after the confirmation that has a material impact on your plan.
A confirmed plan can only be modified with a new notice and a court hearing. The notice must be sent to each of your creditors, and the hearing must be scheduled at least 25 days afterwards so that your creditors can file objections to the modified plan, if they wish.